Unsurprisingly, demand has declined since the peak in 2007/2008 but it’s steady and it appears that the new areas of growth are actually the old favourites. It’s clear that investors are favouring the tried and trusted locations when it comes to overseas property but they also want easy access, good rental opportunities and security with price appreciation over the long term.
Conversely, the flurry of interest we saw in the far-flung emerging markets a few years ago seems to have totally disintegrated.
France and Spain are top of the hot spots list, with enquiries for both locations having increased considerably over the last three years. Turkey and Portugal are still popular too, while interest in Australia and the USA has also been creeping up recently.
But don’t just take it from me. Rightmove Overseas reported record levels of traffic on its website earlier this year, and Knight Frank says that buying property abroad has now become an achievable dream for many Brits.
James Price, Head of International Residential Development at Knight Frank, says:
“Brits will continue to buy second homes in the sun; it has become a reality for so many rather than the dream it once was for all but a few”.
He says that the appeal of purchasing property abroad is a bigger driver of sales than an urge to escape the recessionary climate in Britain, with “climate and investment” the biggest factors for those buying homes in different countries.
You may be surprised to hear that many overseas mortgage providers still have a healthy appetite for lending to foreign investors. In addition, falling property prices, in some cases by up to 50 per cent, and historically low interest rates are making it much more affordable to buy overseas property.
The French mortgage market, for example, has remained very calm throughout the global downturn, primarily due to its financial system having been more cautious in the past. It currently offers the widest range of finance options and best available rates in Europe for UK buyers, and as it’s in a relatively secure situation, loan to value ratios are still high and it’s quite normal to be able to borrow between 70-90 per cent of the value of a property. Rates currently start from just over 2 per cent.
In Spain, mortgage availability is surprisingly good, despite the negative reports about its property market. Maximum “loans to value” are still around 65-70 per cent, although smaller deposits are possible in areas where house prices are more resilient, such as the Balearics, the Canary Islands, Madrid and Barcelona.
Rates currently start from around 3 per cent, with repayment deals prevailing. The Spanish banks now own a lot of repossessed properties, so are offering some attractive rates in order to get these off their hands.
There are plenty of British buyers who are more willing to explore overseas opportunities in their search for better potential returns on investment than they’re achieving in the UK. But many are also looking to buy into a lifestyle, and for a location where they can simply enjoy spending time.
